KT&G went out of its way in 2004 to start selling "fire-safe'' cigarettes in the United States by importing special thin-banded paper and tweaking its production lines and packaging. But on the home market, Korea's biggest tobacco maker didn't bother introducing the new products. There was no need, claimed KT&G.

Five years later, however, that decision has come back to haunt the cigarette giant through a one billion ($738,000) lawsuit filed by Gyeonggi Province, the country's largest local government, which sued KT&G Tuesday for cigarette-related fire damage.

The case instantly garnered national attention, not only because of its unprecedented nature, but because Gyeonggi's move has prompted the country's first legal battle over the responsibility of tobacco firms over fire outbreaks.

The issue has already been widely dealt with in advanced countries such as the United States and parts of Europe, where local and central governments have implemented legal standards requiring tobacco makers to manufacture self-extinguishing cigarettes to reduce fires.

KT&G's switch to a fire-safe product in the United States in 2004 was also a result of a new law there. Currently, 32 states in the U.S. require the sale of self-extinguishing cigarettes. In Korea, there is no such requirement. Exports to its main markets in Russia, Uzbekistan and Iran are not fire-safe.

A ruling Grand National Party lawmaker, however, is working to pass a related bill in the National Assembly, although industry insiders downplay the chances of anything getting written into law any time soon, due to tobacco firms' heavy lobbying.

"Even without the law, manufacturers are fundamentally required to take all precautionary measures against accidental damage caused by the negligent use of their products,'' Bae Keum-ja, the attorney leading Gyeonggi's litigation, told The Korea Times.

She argued that KT&G took advantage of legal loopholes by selling products without proper safety protection here, when it was capable of producing a better version.

Bae, who helped formulate the province's complaint, demanded compensation from KT&G for fires that broke out between 2005 and 2007. Cigarette-related fires cost the province an estimated 79.4 billion won over the two-year period, she said.

Self-extinguishing cigarettes, commonly known as Reduced Ignition Propensity (RIP) tobacco, are designed so that they automatically burn out if they are not inhaled for several seconds. The most widely used fire-safe technology by cigarette makers is to wrap cigarettes with two or three bands of ultra-thin paper that essentially inhibit burning.

"It's baffling to see the Korean (cigarette) maker sell safe goods overseas, while providing sub-standard products to its home market,'' said Bae.

But KT&G has its own argument.

"The primary fault of a fire accident is with the person who caused it ― not because of the product he or she was using,'' said company spokesman Kim Tae-hoon.

He stressed that even lower-ignition cigarettes are not 100 percent fireproof, as studies show that only 7.5 out of 10 cigarette butts self-extinguish went left unattended.

"The introduction of the RIP products isn't the solution to minimizing fire outbreaks, but that's what Gyeonggi is claiming,'' said Kim, who hinted that KT&G will take a counteraction against the province's lawsuit.

The company will implement new products in Korea if the requirement becomes law, said the spokesman.

The company's 2008 third-quarter earnings rose 15.3 percent from a year earlier, with net profits reaching 228 billion won and sales increasing to 658.1 billion won.

KT&G declined to discuss the financial loss resulting from producing lower-ignition goods, but a recent study conducted by the Canadian government shows that companies' operating profits would slump by an estimated 2.9 to 5.9 percent if they absorbed the increased costs.

Fire-safe cigarettes also burn slower, which means that smokers' consumption of cigarettes would be less, said Bae.

Gyeonggi Province and KT&G are expected to lock horns in the legal battle set to go on for at least two years, with both parties standing firm on their positions.